Labour's Tone Depresses UK Consumers

In an ironic twist, the new UK government is finding that its honest communication and cautious fiscal approach are not being seen as offering more responsible economic stewardship and better long-term prospects. Instead, too many interpret it as undermining economic prospects and threatening the political unity of the Labour Party. Yet the real problem lies elsewhere: It’s in the inclination to share news piecemeal and without the benefit of the robust and repeated support of an overall growth framework.

According to the latest GfK data, consumer sentiment in the UK plunged in September to a level last seen in January. Notwithstanding the latest retail sales numbers surprising on the upside, there is mounting concern that the associated decline in households’ willingness to spend risks translating into lower consumption at a time when the government is seeking to reenergize existing growth engines and create new ones.